Real estate finds itself at the center of the storm once more. In 2008, overstretched homeowners, speculative property developers and loose lenders combined to trigger the most severe economic downturn since the Great Depression.

This time, the rapid spread of the new coronavirus is forcing the shutdown of spaces upon which the real estate industry relies to survive. Much of Europe, which the World Health Organization now describes as the epicenter of the pandemic, is locked down. Citizens have been instructed or strongly advised to stay in their homes, "nonessential" businesses ordered to close.

European stock markets highlight the scale of the disaster for the real estate sector — not only for landlords, but also for their tenants. The total return in euros from the S&P Europe Broad Market Index, which tracks the share prices of more than 1,500 listed European companies, has fallen by 33.3% since Jan. 1, around the time the virus was first officially identified in the Chinese city of Wuhan. The S&P BMI for the real estate sector has fallen 38.4% in that time.

As the crisis in Europe escalates, the scale of the losses is dumbfounding stock watchers. "Company fundamentals have almost become irrelevant given where prices have moved in the last couple of days," Colm Lauder, a real estate equity analyst at stockbroker Goodbody, said in an interview. "It's phenomenal."

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The uncertainty around how many victims the virus will claim, how long lockdowns will remain in place and how many businesses will survive this most extraordinary of situations means forecasting for the sector and individual businesses is an almost impossible task.

"It's a mess," Lauder said. "We need to understand worst-case scenarios, best-case scenarios, but fast-moving political and central bank policy means this can change in hours, so it's difficult to know what to forecast, when and where. At this stage, we want to highlight companies with resilient, storm-ready balance sheets, but the market has yet to differentiate."

The retail and hospitality property sectors have the most immediate exposure to the outbreak and resulting lockdowns, said Lauder. The closure of shopping centers across Europe comes at a time when retail landlords are already struggling with the impact of e-commerce on brick-and-mortar retailers.

Klépierre, one of the largest listed retail property landlords in Europe, expressed its concern about the long-term impact of the virus on many of its tenants. In a March 12 statement responding to the closure of its shopping centers in Italy, it said "a persistent, deeper and more generalized decline in retailers' sales [as a result of the coronavirus] could adversely affect their solvency and Klépierre's ability to collect a portion of [rents]."

Statements from other major listed European retail landlords Unibail-Rodamco-Westfield, Deutsche EuroShop AG, Wereldhave NV and Eurocommercial Properties NV have similarly highlighted the impact of the virus on their tenants and prospective rental income.

Meanwhile, hotel operators are facing a complete shutdown in operations as both tourist and business travelers stay at home. Two of Europe's largest hotel operators, AccorHotels and InterContinental Hotels Group PLC, had already suffered widespread closures of their assets in China. Accor estimated a loss of €5 million in revenue in February after it was forced to close around 20% of its hotels in China during the outbreak. IHG had to close 160 hotels in China, resulting in the loss of about $5 million in revenue in February.

As property markets across Europe struggle to forecast the impact of the virus, analysts and investors might well look to Italy for an indication of what to expect over the coming weeks and months. Italy is the European country most severely impacted by the outbreak, with almost 3,000 deaths recorded as of March 18. It was the first European country to impose a lockdown on its citizens following the rapid spread of the coronavirus.

While many Italian property deals that were close to completion appear to be progressing, fresh investment in the country's real estate market, which relies heavily on foreign investors, has ground to a halt, said Simone Roberti, head of research for Italy at real estate services firm Colliers. "All the investments that could have been done now, they cannot be proposed to foreign investors because they will not come [to Italy]," Roberti said, adding that foreign investors make up around 70% of the Italian commercial property investment market.

The Italian occupier market is also freezing up. The impact of the virus is expected to push Italy's economy into recession at the end of the first quarter of 2020, making businesses much more reluctant to commit to taking new or more space, Roberti said. "The companies that had started to think about moving in the coming months, they will start to think they don't need all that new space, and that with a recession coming they should wait."

Investment in European property had already been disrupted by the cancellation of the industry's annual flagship conference and exhibition, MIPIM, due to concerns about the virus' spread. The event was set to take place in Cannes, France, in the second week of March, but was canceled Feb. 29 after several major exhibitors pulled out due to concerns about the spread of the virus.

The event is an important platform for the marketing of property deals and networking between buyers and sellers, according to Pamela Hoerr, board member of German real estate asset manager Real I.S. AG, which has €9.2 billion in AUM.

Still, there are opportunities for property investors in the current climate, Hoerr said. "It's always good to invest when there is not too much appetite in the market," she said. "We have been battling with too much capital in the market over recent years."

Goodbody's Lauder said he sees some positivity for the sector also in the scale of the action taken by central banks around the world in recent days. "They're pumping money into the economy," he said. "This will devalue paper assets [such as bonds]; hard assets [like property], in an increasingly lower-yielding environment, are likely to be outperforming once this is all over with."

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